Unemployed U.K. Man Made $1 Million on Insider Tips: FSA
An unemployed British man made 692,644 pounds ($1.09 million) spread-betting with inside tips he received about upcoming mergers, a lawyer for the U.K. Financial Services Authority said.
Richard Joseph, 43, traded on information he received from Ersin Mustafa, who worked in the print room at JPMorgan Chase & Co. (JPM)’s Cazenove unit, FSA lawyer Michael Bowes told a jury today, the first of Joseph’s London criminal court trial.
Joseph, unemployed since the summer of 2000, was charged with conspiring to trade on shares of Abbot Group Ltd., Fiberweb Plc, IMI Plc, Expro International Group Plc, Greene King Plc and Aero Inventory Plc, based on the tips from Mustafa between September 2007 and July 2008.
Joseph made payments of more than 268,000 pounds to Mustafa, who also passed on tips from his brother, Ali, who worked at the UBS AG (UBSN) print room, prosecutors said. Ersin Mustafa fled the U.K. in December 2009 and is believed to be in Northern Cyprus, Bowes said.
The tips “allowed Richard Joseph to trade at a substantial advantage to the rest of the market,” Bowes told the jury. “Insider dealing is a type of fraud. Put simply, it’s cheating.”
Joseph pleaded not guilty to six charges of conspiracy to commit insider trading and will provide his defense later in the trial. He had worked in the finance industry in London in the late 1990s, for London Capital Group Holdings Plc, an online-trading firm, and International Clearing Associates (London) Ltd., Bowes said.
The second firm, a futures-trading company, collapsed in 2000 after being shut down by regulators for not having enough financial resources.
Joseph regularly had trading exposure of more than a million pounds, and once as much as 3 million pounds, Bowes said. Bowes said the FSA’s investigators weren’t able to find any evidence on computers seized from Joseph’s London apartment that he had done any independent research on the shares.
The FSA arrested Joseph in May 2010. At the time, he gave a written statement to investigators denying he received inside information from anyone. He told them he met Mustafa in 2007 and “may have” discussed securities with him. Joseph was charged in January last year.
“Joseph’s prepared statement was in large measure untrue,” Bowes said. “He was not exercising his own judgment in deciding to place spread bets on the shares of these companies.”
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